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Hani Elbeyali is a data center strategist for Dell. He has 18 years of IT experience and is the author of Business Demand Design methodology (B2D), which details how to align your business drivers with your IT strategy.

HANI ELBEYALIDell

The new buzz word is “Agility." But what does agility mean to the business? Does “IT Agility” align with “Business Agility”? Let’s take a closer look.

Business Agility

For example, business leaders may consider agility in the form of “current ratio,” which in financial terms means the ability to convert current assets into cash in less than one year. This convergence would normally include account receivables and inventory as well as cash, divided by the current liabilities of the firm.

“Current ratio”= current assets/ current liabilities

This ratio is important for bankers to decide whether to approve a loan or not. If the ratio is less than “one,” most likely the company is running out of cash in less than a year. Most firms try to keep current ratio in range of 1-2 to balance debt leverage and the amount of cash reserved.

IT Agility

The foundational elements of IT agility are: availability, performance, consumers' expectations, quality and Service Level Agreements (SLAs). Holistically, all these make up an agile IT.

Comparing Apples and Oranges?

Therefore, and at least by way of definition, there is no one-to-one direct correlation mapping between business agility and IT agility.

The question now becomes how to align business agility with IT agility? The answer: Transforming IT into dynamic, value creating and flexible functions for the Line of Business (LoB). This will allow the CIO to monitor, measure, and report for IT agility performance at the speed of business.

The transformation will form the missing link between business and IT languages and strategies. Transforming[CM3] IT is a staged journey which needs to execute spherically around four major axis, these four axes are:

Grow revenue for the firm

Protect the firm’s revenue

Reduce operating expense

Manage risks

Click to enlarge.Source: Rubin Systems

It is extremely critical to measure the transformation success against these four axes during each stage of the transformation. I propose two stages transformation 1) transformation planning, and 2) the infrastructure touch points.

According to Gartner, “Most IT organizations are allocating close to 80 percent their budgets to 'keeping the lights on' expenses.”[1] The IT transformation should be designed to increase strategic spends on innovation from currently 20 percent average to 40 percent, and reduces maintaining the lights-on spend from 80 percent to 60 percent. By shifting some of the spend on strategic efforts, i.e. plan and design, the reward would be huge saving in Operating Expenses (OpEx) and TCO (total cost of ownership) for the IT budget.

Although I recommend a target of 20 percent cost shift at launch, the momentum of positive impact will create a snowball affect over the ensuing years, and will encourage more strategic spend on plan and design to reach the break point of 50 percent OpEx (keeping the lights on) and 50% design and plan (strategic spend). I find that 50:50 ratios is the peak point, beyond that you will encounter point of diminishing return of further optimization.

[1] (Gartner, 2012)

Please note the opinions expressed here are those of the author and do not reflect those of his employer.